Category: Acton Commentary

In this week’s Acton Commentary, Kevin Schmiesing looks at the exchange between Supreme Court nominee Elena Kagan and Sen. Tom Coburn over the interpretation of the Constitution’s Commerce Clause.

Elena Kagan’s Revealing Commerce Clause Evasion

by Kevin E. Schmiesing Ph.D.

Many Americans have a vague sense that the United States has drifted far from its constitutional origins. Every once in a while, something happens that prods us to recognize just how far we’ve gone.

Such was the case last week, during the Senate hearings on Supreme Court nominee Elena Kagan. One of the most widely circulated C-Span video clips was Senator Tom Coburn’s insistent question as to whether the Constitution’s commerce clause permitted Congress to pass a hypothetical law dictating that all Americans must eat a prescribed number of fruits and vegetables every day.

Kagan was clever enough to understand that what Coburn was really asking was, “Is it possible to justify the continued expansion of congressional powers—in particular recent health care reform legislation—on the basis of the authority granted by the commerce clause?” Kagan replied that the fruits and vegetables measure would be “dumb” law. She didn’t dare suggest that it would be unconstitutional, however, for she rightly recognized that she would be backing herself into a judicial corner. How many laws might she have to strike down as Supreme Court justice if she followed a “strict” interpretation of the Constitution?

Thus we’ve come to a point at which a Supreme Court nominee cannot bring herself to condemn a manifestly totalitarian law, because doing so would be utterly inconsistent with federal jurisprudence over the last 80 years. Kagan’s response shines a spotlight on the fact that the Constitution exercises little restraint upon the activities of our national government. This is dangerous territory.

There are rearguard actions from time to time. The Court invalidated campaign finance reform early this year, judging it to be a violation of first amendment rights—for which the justices were upbraided by President Obama on national television during a State of the Union Address. Yet, by and large, Congress acts with impunity to intervene in our economic affairs, usually justifying itself (in those rare cases when it feels the need to do so) by recourse to the commerce clause.

Perhaps it’s worth revisiting that passage from our founding document, on which millions of pages of federal regulation have been piled. Can it support such weight?

Congress shall have power, it says, “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” That’s it. The original purpose of this directive with respect to commerce “among the several States” was to ensure that there would be no interstate trade barriers. The formation of a vibrant national economy, the framers correctly understood, could not very well proceed when Ohio and Michigan erected tariffs against each other. So, the intent of the commerce clause was to protect the principle of free trade within the United States, leaving other financial and mercantile regulatory authority to each state.

Taking the Constitution seriously is important because the document forms the basis for the rule of law in this country. By ratifying it, the states and the citizens thereof affirmed the truth of a great paradox: Enacting limitations on ourselves is the only way to guarantee lasting and genuine freedom. It was a profoundly moral endeavor. The Christian notion of sin lay at the heart of many Americans’ belief that the tendency toward corruption and aggrandizement in government officials—and the potentially destructive whims of democratic majorities themselves—must be guarded against not only by promotion of personal virtue but also by legal instruments such as constitutional separation of powers and checks and balances.

For the most part, the Supreme Court honored the intent of the commerce clause until the 1930s, when the force of public sentiment and political pressure stemming from the Great Depression began to pry the lid off, loosing its potential as a Pandora’s box of federal government programs reaching into every corner of American life. In 1942, the Court defended a production quota on wheat set by the Department of Agriculture, upholding the prosecution of an Ohio farmer for growing too much. When he used his excess, the decision explained, he wouldn’t be buying that amount on the market. His flouting of the law thus affected interstate commerce.

Quod erat demonstrandum: The government can tell you what and how much to grow. Why can it not also tell you that you must purchase health insurance (and therefore what kind, and from which approved vendors)? And why can’t it tell you what and how much you may eat?

Our hope lies in our belief that, when a law is “dumb” enough, nine fellow Americans on the Supreme Court will have the good sense to strike it down. But we will be dependent on their sense alone. Although they will invoke the Constitution as a fig leaf for whatever judgment they render, we know the truth: Its value as a curb on government action—and therefore as a safeguard of freedom—was all-but-destroyed long ago.

My commentary this week is a simple message about the importance of returning to our founding principles and embracing the liberty granted to all of us as Americans. Independence Day should always serve as a significant reminder of the freedom narrative of this country that has provided so many people with opportunities to flourish and live out their dreams:

America’s Destiny Must Be Freedom

Ralph Waldo Emerson described America as “the land that has never become, but is always in the act of becoming.” Many Americans don’t feel that way as pessimism has replaced a once vibrant optimism about the future. Economic malaise, crippling debt, and a mammoth oil gush in the Gulf Coast are daily reminders of seemingly unmovable obstacles.

Bob Herbert wrote a New York Times column echoing the sentiment of an aimless America titled “When Greatness Slips Away.” While many claim to have the answers to our economic woes and lack of confidence, we would do best to return to the principles of the Declaration of Independence, the American Founding, and our freedom narrative. In past crises, they have been sources of American endurance and strength. They can be again.

Those sacred words from the Declaration—“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness”—have been an inspiration to billions of people at home and abroad for centuries. Freedom from excessive centralization of power and the right of the citizenry to flourish without undue interference are hallmarks of what it means to be American. And while the federal government has used activism for good at times, most notably for securing civil rights in the American South, it is revealing itself more and more as the obstacle to progress.

Many in the academy and the modern left scoff at what they call the “Horatio Alger myth.” Alger wrote stories such as “Ragged Dick” and “Only an Irish Boy.” He told stories of poor children achieving the American dream through hard work, determination, and virtue. But Alger also depicted an important spiritual component to his impoverished characters. He gave them dignity and natural rights, just as our founding document did. His tales reflected the kind of egalitarianism that asserts that the value and dignity of a destitute human person is equal to that of another born into prominence and prosperity. These ideas grew right out of our religious heritage and founding.

But if Alger’s stories were not myths before, they will be soon. Future generations’ enjoyment of the liberty to flourish is in jeopardy. The Chairman of the Joint Chiefs of Staff, Admiral Mike Mullen, last week called the $13 trillion national debt the “biggest threat to our national security.” Annual interest on the national debt in 2012 will grow larger than the entire defense budget. Currently 43 cents of every federal dollar spent is borrowed.

This kind of dependency is antithetical to our tradition of self-reliance. Pick up any honest textbook about American history and the march of America is about freedom and opportunity. On the day of the invasion of the greatest army of liberation ever assembled, General Dwight D. Eisenhower told his armed forces “The eyes of the world are upon you. The hopes and prayers of liberty-loving people everywhere march with you.” These men are often called “The Greatest Generation.

Succeeding generations may call our own “the debt generation” as their dreams become enslaved to deficits so colossal that they sap their entrepreneurial spirit, savings, and earning potential.

Big government activists are already using the BP oil spill to double down on their claim that the federal government is too small, even while the federal response is crippled by a multilayered bureaucratic decision making process and excessive regulation. Others say the BP oil spill is the perfect sign that America’s economic and moral might has peaked.

In his 1993 Inaugural address, President Clinton said, “There is nothing wrong with America that cannot be cured by what is right with America.” It’s a simple yet profound point. Similarly, the primary reason Russell Kirk penned The Roots of American Order in 1974 was to remind his country of the moral bedrock at its base, and to thereby show the way to how it could maintain greatness. In the first chapter, Kirk quotes a passage from the book of Job saying if the nation lacks foundation and order “even the light is like darkness.”

As American citizens pontificate about the future of America this July 4th, they should ask themselves what they can do to curb the contraction of liberty and promote its expansion. It is the citizens, thankfully, who will decide America’s destiny.

Acton Research Director Samuel Gregg contributed the article here, one of two Acton commentaries published today. Sign up for the free, weekly email newsletter Acton News & Commentary to receive new essays, book announcements and the latest news about Acton events.

One of the most famous plays in Western history was penned by the German writer Johann Wolfgang von Goethe (1749-1832). His two-part drama, Faust, is considered one of the greatest works of German literature. This complicated and sometimes disturbing text tells the story of a young scholar, Faust, who enters into a pact with the devil, Mephistopheles. In return for Mephistopheles’ services to help him realize his ambitions, Faust wagers the devil his soul.

Throughout the play, Faust asks Mephistopheles to help him achieve several ostensibly good ends. But each time he summons up the devil’s power, Faust gets more than he bargains for. In one scene, for example, Faust finds himself living as the landlord of a prosperous estate. His tranquility is disturbed only by an elderly couple who holds a freehold enclave on Faust’s land. Faust asks Mephistopheles to displace them. The devil fulfils his request, but in a way unanticipated by Faust: the elderly couple’s house is incinerated and the couple murdered.

At the beginning of part two, however, the play makes a surprising excursion into economics. Accompanied by Mephistopheles, Faust attends the court of a ruler whose empire is facing financial ruin because of profligate government spending. Rather than urging the emperor to be more fiscally responsible, Mephistopheles—disguised, revealingly, as a court jester—suggests a different approach, one with disturbing parallels to our own age.

Noting that the empire’s currency is gold, Mephistopheles maintains there is surely plenty of undiscovered gold underneath the earth belonging to the emperor. Thus, he argues, the emperor can issue promissory notes for the value of this yet-to-be-found gold, thereby generating fresh monetary resources for the government and solving its debt problems.

Not surprisingly, the emperor and his treasurer are delighted with this idea. It means the monarch can avoid making hard economic choices while simultaneously providing the empire with desperately needed currency. Mephistopheles subsequently deluges the court with paper money, and Faust is praised by emperor and commoner alike.

The results, however, are not what are expected. First, the issuance of paper money does not solve the emperor’s spending problems. Instead the ruler and his court become even more extravagant, knowing they can always print more paper money to cover their ever-growing expenses. Second, the devil has subtly but fundamentally changed the basis of the empire’s currency. Instead of being rooted in the solidity offered by a tangible and valued asset, the currency is now based on flimsy paper promises. Thus long-term monetary stability and powerful restraints on extravagant government spending are sacrificed for short-term gain.

Goethe finished writing the second part of Faust in 1832. Modern economics was then only emerging from its infancy. Yet Goethe’s insights go to the heart of some of our most intractable long-term economic problems.

One concerns the impact of fiat money. Technically speaking, fiat money is a currency that a government declares to be legal tender, even though it has no intrinsic value. Throughout history, fiat money has been the exception rather than the rule. Most currencies have been based on physical commodities, particularly gold. By contrast fiat money is ultimately based upon enough people having faith that a given currency will be accepted for the purpose of economic transactions.

Such faith, however, is easily shaken. The euro’s recent tribulations are a good example of what happens when people begin losing their faith in a fiat currency. The expression “as good as gold” underscores the confidence people have always attached to commodity-backed currencies, especially in difficult economic times.

The second problem concerns the temptation faced by governments as they struggle to solve their deficit problems. In 2009, America’s federal government posted a $1.4 trillion deficit. That’s 10 percent of U.S gross domestic product, a level not witnessed since World War II. Given a choice between cutting spending, borrowing, or inflating the money-supply, the third option appeals to many politicians. Moreover, like Goethe’s emperor, it’s exactly what many Western governments did between 1945 and 1980: short-term relief was bought at the expense of long-term fiscal stability.

But perhaps the biggest lesson from Goethe’s Faust is that self-deception is intrinsic to all foolish acts. Whenever governments choose comforting economic illusions over difficult economic truths, then, like Mephistopheles, they will employ dubious means such as state-engineered inflation or public-sector indebtedness to make ill-conceived economic policies seem less burdensome to those who will in the long term eventually have to pay the price.

Since 2005, evangelicals have divided into two roughly opposing camps over the question of anthropogenic global warming. Official statements of the Southern Baptist Convention through its resolution process, its Ethics and Religious Liberty Commission, and the Cornwall Alliance have typically rejected the theory of anthropogenic global warming and catastrophic climate change predictions. They assert that it is more likely that global warming will be moderate and have moderate or even helpful effects on the environment over all. They also argue that the reduction of carbon dioxide emissions is unlikely to have significant impact on global warming. These groups have focused primarily on the impact of climate-change policy on developing economies and the poor. On the other side, the Evangelical Environmental Network, through its Evangelical Climate Initiative and (as it seems) the SBECI have affirmed the existence and danger of anthropogenic global warming and have called for action to prevent it.

Despite conflict among evangelicals over the existence of anthropogenic global warming, there has been a great deal of consensus on the theological basis for addressing environmental degradation. Most evangelical statements appeal to the fact that God is the creator of the world as a basis for understanding the value of nonhuman creation, and many note that God is its owner. Virtually every evangelical statement on the environment and climate change acknowledges that God has commissioned humanity with the responsibility of stewardship/dominion over the earth and that the execution of this responsibility has been perverted by sin, with negative impact on the environment. Evangelicals have also, almost without exception, affirmed the responsibility of Christians to care for the poor as an important factor in considering environmental policy.

In recent months, the European social model has been under the spotlight following Greece’s economic meltdown and the fumbling efforts of European politicians to prop up other tottering European economies. To an unprecedented extent, the post-war European model’s sustainability is being questioned. Even the New York Times has conceded something is fundamentally wrong with the model they and the American Left have been urging upon America for decades.

Western Europe’s postwar economies were shaped by an apparent concern for the economically marginalized and the desire to realize more just societies. This inspired the extensive government economic intervention, high-tax rates and generous welfare states now characterizing most contemporary European economies. After 1945, Communists and Christian Democrats alike rallied around these policies. For Marxists, it was a step toward realizing their dream. For non-Marxists, it was a way of preventing outright collectivization.

Even today, words like “solidarity” and “social justice” permeate European discussion to an extent unimaginable in the rest of the world. If you want proof, just switch on a French television or open a German newspaper. The same media regularly contrast Europe’s concern for justice with America’s economic culture. America, many Europeans will tell you, embodies terrible economic injustices in the form of “immense” wealth-disparities, “grossly inadequate” healthcare, and “savage” competition.

But while such mythologies dominate European discourse, it’s also true that Western Europe’s economic culture is characterized by a deeply unjust fracture. Modern Europe is a continent increasingly divided between what Alberto Alesina and Francesco Giavazzi called in The Future of Europe (2006) “insiders” and “outsiders”.

The “insiders” are establishment politicians of left and right, trade unions, public sector workers, politically-connected businesses, pensioners, and those (such as farmers) receiving subsidies. The “outsiders” include, among others, entrepreneurs, immigrants, and the young. Naturally the insiders do everything they can to maintain their position and marginalize outsiders’ opportunities for advancement.

In his 1950 work, “The Liberal Imagination,” Lionel Trilling famously stated that American liberalism was the one true political philosophy, claiming it as the nation’s “sole intellectual tradition.”

Unknown to him, two young men — one toiling as a professor at Michigan State Agricultural College (now Michigan State University) and the other finishing his degree at Yale University – would publish two articulate, galvanizing works. The first, Russell Kirk, unleashed “The Conservative Mind,” in which he defined conservatives as being wary of change, revolutions and ideologies in the manner of Irish statesman Edmund Burke. The second, William F. Buckley, first published “God and Man at Yale” and later inaugurated The National Review, the first issue bearing Buckley’s definition of a conservative as one who stands “athwart history, yelling stop!”

Slight differences, to be sure, but, as George H. Nash notes in his excellent “ Reappraising the Right ,” these variations are indicative of the inherent schisms in the modern American conservative tradition from its beginning.

Both Kirk and Buckley agreed that the conservative tradition had its roots in spirituality –specifically, the Judeo-Christian tradition. Morality and right-thinking come not from man, but from a higher power. Furthermore, humankind will continue to succumb to the temptations and appetites of the flesh it has been heir to since the Fall. The two men took as articles of faith that humanity is not perfectible and that the striving for earthbound utopias is foolhardy.

Kirk, writing from the “stump country” of Mecosta, Michigan, and Buckley, writing and speaking in his Brahmin-drenched New England patois, differed in their views of where conservatism derived, what precisely it was and where it should go. Despite their differences, Kirk wrote a column for nearly every issue of National Review from its inception and for almost 30 years.

The early 1950s were watershed years, to be sure, because as soon as a new conservative front was established, the fortress was besieged from within and without. The 1964 Barry Goldwater campaign against Democrat incumbent President Lyndon Johnson notwithstanding, the high water mark of conservatism in the lifetime of most readers would more than likely be defined as the victory of Ronald Reagan over Jimmy Carter in the 1980 election. Reagan, a former Hollywood actor, supporter of Goldwater in the 1964 election, and former California governor, became an icon for all that modern conservatism came to represent: low taxes, personal responsibility and small government.

When poor countries grow rich, it rarely has anything at all to do with how many mouths they have to feed or the abundance of natural resources. Instead, across the globe, poor countries of all sizes, climates, and endowments begin to grow rich as two key factors increase.

First, countries grow rich as their human capital improves. Human capital is the term economists use to describe the value that a country’s people possess through their accumulated experience and education. For example, there is little doubt that India’s recent growth explosion is due in large part to the education—including the knowledge of the English language—of its people.

Second, countries grow rich as they invest in and accumulate physical capital: the machines, tools, infrastructure, and other equipment that make the product of each hour of physical labor more valuable. That which both human capital and physical capital share is that they both transform the result of an hour of a person’s hard work into something of even greater value. As the value of an hour of labor rises, employers gladly pay higher hourly rates, knowing that their bottom lines will be the better for it.

If we want to be effective agents in aiding the poor, we should focus our efforts in directions leading to the enhanced value of an hour of labor. That is, we should help poor countries wisely grow their stocks of human and physical capital, all the while bearing in mind that markets and their prices send the best available signals regarding where our efforts can have the greatest impact. The newfound success of innovative micro lending efforts such as Kiva can help show us ways to effectively invest in the accumulation of physical capital by the global poor. Compassion International is a marvelous organization that works to further the education—the human capital—of poor children worldwide, with a financial accountability record above reproach. (more…)

I had been scheduled to appear opposite Ray Nothstine at the most recent Acton on Tap last month to discuss the question: Are Tea Parties good for America? I had to miss that event, unfortunately, but this week’s Acton Commentary represents my belated engagement on these matters. Check out, “Missing the Boat on the Tea Parties,” and leave your comments here.

And speaking of Acton on Tap, if you are in the area be sure to join us tonight for David Michael Phelps, “Story & Syllogism: Why do artists tend not to be conservative? How can the works of conservative artists have a greater impact?” Be sure to check out Phelps’ site, The Artistic Vocation.

Our economic life is concerned with more than just the objective exchange of goods and services. Far from being morally neutral, it is an expression of how we understand our dependence on God and neighbor and is the means by which we fulfill, or not, our obligations toward them. Both for reasons of morality as well as long term economic efficiency, we cannot overlook or minimize the centrality of personal virtue, and of a culture of virtue, to the success of the free market. It is not enough for me to be good; we must be good together. Or at minimum, and whatever our personal moral shortcomings, culturally we must value and reward moral excellence.

Jack Cashill understands this and in his new book, Popes & Bankers: A Cultural History of Credit & Debt, From Aristotle to AIG, he traces the changing moral attitudes towards lending and borrowing in Western culture. From the beginning the author is clear that we cannot separate a conversation about debt and credit, and so the economics of the free market, from a conversation about our personal and cultural moral lives.

Quickly the author takes us through some 25 centuries of social history. Along the way we hear from Dante and Shakespeare. To my delight, The Merchant of Venice has a recurring role in Cashill’s analysis and he uses effectively the changing portrayals of Shylock to illustrate shifting cultural attitudes toward debt.

Aristotle and Aquinas also make an appearance and join a cast that includes Medieval popes, Renaissance Jewish lenders, Protestant Reformers, 19th Century American robber barons and financiers. And of course our favorite villains, the bankers, lenders and borrowers who figure so prominently in the recent economic collapse make an appearance. Though the tone is at time a bit too flippant for my tastes (especially when discussing the Medieval Catholic Church), the text offers a good historical overview of the cultural and moral debate about debt. Throughout the author highlights intimate connection between moral character and economic life.

Cashill locates our current distress in the gradual cultural changes in the “fifty or so years since interest rates” were last at 1 percent. This cultural shift has “had less to do with the behavior” of lenders and more to do with our unwillingness to censure “the behavior of consumers, especially the prodigal” among us. While not minimizing the “downside” of “major investment houses” shifting “from partnerships to corporations” (which both “democratized Wall Street” even as “it diminished long-term loyalty and distanced executives from the consequences of failure”) he locates our moral failure in our growing evermore “dependent on credit.”

Through governmental and private institutions, Western culture is now eager “to oblige its prodigals” and extend to them the credit that allows them to live, for a short time at least, above their means. In addition where once we thought of “prodigals as sinners” today we “think of them as they think of themselves–as victims.” Cashill points out that “the real divide in America today is not between left and right but between those who would sympathize” with the prodigals among us “and those who would not.” While we condemn “predatory lenders” we never even discuss, much less censure, the”predatory borrower” who also played a central role in the collapse of the housing market.

Ideally our willingness to go into debt reflects our confidence in the future and rather than a desire to fulfill momentary desires. For this reason, we should think of debt, as Cashill does (and as Western cultural has historically) as a profoundly moral and is not simply economic question. Because we have lost sight of the necessary connection between virtue and an efficient free market, we now face a widespread lack of confidence in the economy.

Our lack of confidence reflects a more fundamental a lack of trust in the future. To borrow from moral theology, the economic crisis is a crisis of despair; we have lost faith in the goodness of tomorrow.

So how do we reclaim hope in the economic sphere? As Aristotle has it, we must be “liberal.”

Needless to say Aristotelian liberality is markedly different than our contemporary understanding. For Aristotle to be liberal means that we not spend more than we have and then spend only “on the right objects.”

But true liberality can only exist within a living tradition of moral virtue. In our current circumstances we are sorely tempted to settle for merely technical solutions. Yes, these are important but what is needed most is repentance and the cultivation of the cardinal, and dare I say, theological, virtues. Whether this will happen or not depends on how we exercise our personal freedom and the decisions we make as a culture.

In any case Cashill’s work offers us a sound foundation from which to argue in the public square that our economic pursuits must take place within a “culture of life” and this is necessary not only morally but also for the efficient working of the free market.

In another Acton Commentary this week, Research Director Samuel Gregg looked at Catholic dissenter Fr. Hans Küng, who recently published an “open letter” broadside directed at the Vatican. Küng’s letter includes the now discredited Malthusian warning about global overpopulation (see video above). The letter, writes Samuel Gregg, “shows just how much he remains an unreconstructed creature of the 1960s.”

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Hans Küng’s Malthusian Moment

By Samuel Gregg

In April, the world received yet another global missive from the 82-year-old Swiss theologian, Fr. Hans Küng. Perhaps the world’s most famous Catholic dissenter from Catholic teaching, Fr. Küng’s “open letter” to the world’s Catholic bishops contained his usual critique of the papacy and his now-tediously familiar prescriptions for changing the Catholic Church.

Almost 31 years ago, Rome and Germany’s Catholic bishops stripped Küng of his license to teach as a Catholic theologian because, by Küng’s own admission, he does not believe in some central tenets of the Catholic faith. Some would say Rome’s action was merely an exercise in ensuring truth in advertizing. This has not stopped Küng, however, from continuing to exhort Catholicism to adopt the path followed by many mainline Protestant confessions in the West since the 1960s.